Dodge, Warren & Peters Ins. Services, Inc. v. Riley, 130 Cal.Rptr.2d 385 (Cal. Ct. App. 2003)
Insurance brokerage firm sued former employees who, before forming their own firm, copied and removed documents maintained in files and computer storage media for their own future use.
Plaintiff filed an ex parte application seeking to “freeze” defendants’ electronically stored data so that it would be available for future discovery, if appropriate, claiming that even defendants’ innocent use of the media could result in the destruction of potential evidence. 130 Cal.Rptr.2d at 388. Plaintiff had already served defendants with request for production, seeking to obtain the computer and other electronic storage media that were the subject of the injunction.
After continuing the hearing to allow the defendants to file a motion for a protective order, the court heard argument regarding both the preliminary injunction and the protective order. Ultimately, it denied defendants’ motion for protective order and granted the preliminary injunction. Id. at 389. The injunction prohibited defendants from destroying, deleting or secreting from discovery any of their electronic storage media, and required the defendants to allow a court-appointed expert: (1) to copy all of defendants’ electronic storage media, including computer hard drives and discs, (2) to recover lost or deleted files, and (3) to perform automated searches of that evidence under guidelines agreed to by the parties or established by the court.
The preliminary injunction was affirmed on appeal. The court discussed the two factors that trial courts weigh when determining whether to issue a preliminary injunction: (1) how likely is it that the moving party will prevail on the merits, and (2) the relative harm the parties will suffer in the interim due to the issuance or non-issuance of the injunction. It stated that the first point “concerns whether there is evidence in the computer and other electronic storage media that [plaintiff] will be able to discover.” Id. at 390. It noted that the record showed that in addition to photocopying thousands of documents, defendants copied many of plaintiff’s computer files onto discs and took them offsite for later use at the new agency, and that the defendants had admitted to taking voluminous files from plaintiff. It further noted that “the computers may also contain other evidence supportive of Dodge’s causes of action.” Id. at 391. It concluded that the trial judge had not abused its discretion in determining that the defendants’ computers and electronic storage media contained information that the plaintiff would have a right to discover.
On the issue of irreparable harm, the court stated that “the record indicates that Dodge could irretrievably lose evidence that otherwise would have been available to it.” Id. The court stated it was unconvinced that the availability of sanctions for misuse of the discovery statutes established an adequate remedy at law for the preservation of evidence. It concluded that no other remedy would provide adequate relief, and that, on the other hand, the harm to defendants would be negligible:
The media would be copied in Defendants’ presence and after working hours so as to not interrupt their ability to conduct business. No damage to or loss of information would result from the copying. The copied material would be unavailable to anyone except upon agreement of the parties or order of the court. Thus, concerns over privacy and privilege were minimized to the point of nonexistence. Further, the reasonable cost to Defendants to review the copied files for irrelevant and privileged documents was to be borne by Dodge, subject to reallocation by the trial court.